The Effect of Lead Time and Demand Uncertainties in (r, q) Inventory Systems
Jing-Sheng Song, Hanqin Zhang, Yumei Hou, Mingzheng Wang
Operations Research · 2010 · Volume 58 · Issue 1
Abstract
We study a single-item (r, q) inventory system, where r is the reorder point and q is the order quantity. The demand is a compound-Poisson process. We investigate the behavior of the optimal policy parameters and the long-run average cost of the system in response to stochastically shorter or less-variable lead times. We show that although some of the properties of the base-stock system can be extended to this more general model, some cannot. The same findings also apply when the comparison is conducted on the lead-time demand distributions.
Keywords
inventory system, reorder-point/order quantity, stochastic lead time, variability, optimal policy, stochastic comparison
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